Bunge reported better than expected first quarter results April 28, but cautioned investors that the second quarter could be more challenging.
“We expect headwinds in the second quarter as South American farmers and markets adjust to a scenario of over production,” CFO Drew Burke said in a media statement.
Bunge reported a net income of $222 million available to shareholders, or $1.60 per share, compared to a net income of $249 million, or $1.58 per share, in the same period a year earlier.
Revenue dropped from $10.806 billion for the quarter ended March 31, 2015, to $8.916 billion for the same period this year.
“In the first quarter, our agribusiness team managed markets, margin and logistics very well in a challenging environment,” said Soren Schroder, Bunge’s CEO, in a media statement.
“Customer demand is strong and global soy processing margins are improving,” he said. “Smaller harvests in South America, due to recent adverse weather, are introducing new market dynamics.”
The company continues to expand its value-added holdings, recently announcing the acquisition of Walter Rau Neusser, a leading European supplier of mid-specialty oils and fats for foodservice and food processing customers.
Burke said recent acquisitions should aid the company going forward.
“In food and ingredients, we expect 2016 results to be higher year-over-year, driven by our operations excellence initiatives and recent acquisitions. We are cautiously optimistic that the improved volumes and margins we are currently seeing in our Brazilian operations will continue.”
First quarter results:
-The company expects Argentine farmers to purchase more crop inputs later this year.
-Increased competition from Argentina negatively impacted margins in Europe and the United States.
Edible oil products
-India continued double digit volume growth.
-Volumes and margins in Russia and Ukraine were impacted by depressed economies, soft consumer demand and unfavorable currency.
-Brazilian business continued to face currency translation headwinds.
-Mexican business delivered stronger volumes and productivity gains.
-Higher volumes and margins at the Argentine operation.
-Increased volumes at the Brazilian port facility.